Page 58 - Economic Damages Calculation

of weight, so long as the most obvious causes have been considered and reasonably ruled out by
the expert). fn 64

The Ambrosini case captures a theme repeated in many cases: The failure to address causes that explain
only immaterial portions of the loss generally will not necessarily result in the exclusion of the expert,
but the expert can attempt to account for, or rule out, causes that have a material effect on the loss. Chal-
lenges for damages experts, however, include the lack of a bright-line test for "obvious factors" and the
difficulty in defining what may be material (for example: amounts greater than XX% of total damages).

The following cases illustrate examples in which the courts determined that damages experts failed to
consider alternative factors that may have caused the losses reflected in the damages expert’s damage
calculations. In each of these cases, the courts (a) granted the defendant’s motions for summary judg-
ment, (b) excluded the testimony of the plaintiff’s expert, (c) reversed damages awarded at trial, in part,
as a result of the questions pertaining to causation presented at trial, or (d) a combination of these ac-
tions.

Alphamed Pharms. Corp. v. Arriva Pharms., Inc.

While the facts of this case are extremely complicated, at the most basic level, this case involved a dis-
pute between former business partners and their biotechnology companies which competed in the devel-
opment of new drug products. fn 65 After being ousted from the defendant, one of the defendant’s part-
ners formed a new pharmaceutical company, the plaintiff, to engage in the development of new technol-
ogy and drug products. The plaintiff began to develop a new line of products and partnered with a major
university to begin clinical studies toward the goal of obtaining FDA approval. The plaintiff also ob-
tained an investor to fund the company in 1999 and submitted a patent application for a new production
method by March 2000.

Despite these events, in 2000, the plaintiff experienced financial problems. Starting in Fall 2000, the
plaintiff began negotiating an open-ended finance agreement with its main investor. At approximately
the same time, the defendant and its principal retained a private investigations firm to "conduct a cam-
paign of corporate espionage against the plaintiff." The defendant obtained information about the plain-
tiff's business and its principal's litigation strategy. The defendant disrupted the plaintiff's efforts to col-
laborate with other biotech firms persuading them not to do business with the plaintiff and even induced
the FBI to open multiple criminal investigations against the company and its principals. Although these
investigations did not result in any criminal charges, these did interfere with its ability to raise funds and
operate. Finally, in early 2001, the defendant caused the plaintiff's main investor to refrain from making
any further investments in the plaintiff.

The plaintiff filed an action against the defendant and others alleging (1) misappropriation of trade se-
crets, (2) tortious interference with advantageous business relationship, and (3) common law unfair
competition. The plaintiff presented a single theory of damages — lost profits. The plaintiff's expert, tes-
tified at trial that the plaintiff had a window of opportunity in 2000 and 2001 to produce quantities of
drugs and needed additional financing. The plaintiff's expert assumed the defendant’s conduct caused
the window of opportunity to close and utilized a "but for" analysis to justify his determination of the

fn 64 Id.

fn 65 Alphamed Pharms. Corp. v. Arriva Pharms., Inc., 432 F.Supp.2d 1319 (S.D. Fla. 2006).

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